MBF Get Smart Balance Transfer - Calculation
A reader wanted to know how the MBF balance transfer calculation was done, and for those who interested on the calculation detail too, here you go:
Interest. At 18% p.a, the monthly interest of RM7,000 is RM105 (1.5% per month x RM7,000). Total interest at the end of the 39 months is RM4,095 (RM105 x 39). Together with the interest, the new monthly opening balance is thus RM7,105.
Minimum Payment. At 5%, the minimum payment for RM7,105 is RM355.25. However by paying this mandatory RM355.25, the balance will be brought down to RM6,749.75 and this will trigger the RM5,499 penalty. To avoid that, cardholder needs to charge a minimum of RM368.42 every month to increase the monthly opening payment to at least RM7,368.42. Double check: 5% of RM7,368.42 is RM368.42 and after paying, the new opening balance is RM7,000. Of the RM369.42, RM105 is for the interest payment and RM263.42 is for the new charges.
By only paying the 5% minimum payment, it will take more than 180 months to pay-off the RM7,000.
Bottom line, nothing is FREE!